Thousands of job losses, higher air and sea fares, the closure of ferry routes, a hike in export costs, an end to the tourism boom and a widening of the urban/ rural divide.

This is the picture of doom painted by those campaigning for the retention of duty-free sales within the EU. If the lobby is to be believed, there is no limit to the catastrophic consequences which will follow the end of duty free from June 30th, 1999.

In the past two years transport companies, vigorously opposed to the measure, have commissioned enough consultancy reports on the issue to fill the wine shelves of an average-sized duty-free shop.

If the reports disagree, it is only about the scale of the inevitable damage if EU Finance Ministers refuse to overturn their 1991 decision to outlaw duty-free sales.

One report predicts all ferry services between Ireland and the Continent will close; another that air fares will rise by 20 per cent; another that 140,000 EU jobs are threatened.

The European Commission disputes the predictions of doom and insists that the decision on duty-free is written into EU law and will not be changed. But the clamour to force a U-turn is growing; 5,000 transport workers staged a demonstration in Brussels this month which many regarded as the real beginning of the duty-free retention campaign.

At a political level, that campaign is being led by Ireland. Despite agreeing to the abolition in 1991, the Government now wants the decision at least put on hold until a full assessment of its implications is carried out.

Such a study was promised by the European Commission when the issue was hotly debated by finance ministers six years ago. But the Commission says that promise was in the context of the original plan to abolish duty-free sales immediately on creation of the Single Market in 1993.

The commitment to conduct a study was overtaken by events when ministers decided to defer abolition until June 30th, 1999, according to Commission officials.

As a result the only detailed figures on the potential impact of duty-free being abolished are from studies commissioned by the industry itself. This may raise questions about their inherent reliability, but most have been carried out by reputable, independent consultancy firms.

One study on the economic consequences for Ireland, carried out this year by Tansey Webster & Associates, makes for grim reading.

It concludes that the only beneficiary of the move would be the Exchequer which would pick up extra tax revenue, but not nearly enough to offset losses elsewhere.

Those immediately made worse off could be classified, says the study, into three groups:

Irish airports, ferries and airlines, which would suffer a sharp fall in profitability;

passengers travelling between Ireland and other EU destinations, who would face higher fares as ferries and airlines tried to recoup lost profits and would no longer enjoy access to duty and tax-free shopping;

And exporters to the EU who would face higher charges for shipping goods to British and Continental markets.

Duty-free shopping will still be legal in the EU after 1999, but only for passengers travelling to non-EU destinations. These passengers account for only 30 per cent of all EU duty and tax-free sales.

The Tansey-Webster study suggests that the loss of intra-EU duty-free sales last year would have cost Aer Rianta £25 million, Irish airlines £30 million, and Irish ferry operators £9 million, in foregone profits.

That total loss of £64 million compares to a potential gain to the Exchequer of £68 million if all the duties and VAT lost through duty and tax-free sales in 1995 were collected by the State. But that potential yield is based on the unlikely assumption that passengers would buy the same volume of goods at the higher, duty-paid prices. In reality, Tansey Webster estimates, the gain to the Exchequer from the removal of intra-EU duty-free would be less than £17 million.

In addition to the direct losses to the transport sector, there would be other, far-reaching repercussions. Growth in tourism would be hit by any reversal of the trend which has resulted in air and sea prices plummeting. Lower fares have played a major part in the country's tourism boom, and as less-developed regions have a high dependency on tourism revenue they would particularly suffer.

A study on the specific implications for the ferry industry, carried out by a Chester-based consultancy firm, MDS Transmodal, predicts 1,800 job losses in the Irish ferry industry and the closure of all direct Ireland-Continent routes.

The European Commission is unmoved by such gloomy forecasts. "The Commission's view is a decision was taken, it was taken unanimously and it's going to come into effect in 1999. That's the end of the story," said Mr Raymond Keane, deputy director of the Commission's office in Dublin.

The Commissioner for Taxation and the Single Market, Mr Mario Monti, was equally uncompromising when he told industry representatives at a recent forum: "You were given seven years and a half to prepare for the end of duty-free sales within the single market . . . it's high time you used this time constructively instead of trying to turn the clock back."

In a memo entitled "Duty Free Sales The Facts", the Commission says duty-free sales to travellers within the EU make no sense now that we have a single market.

Duty-free sales distort the market and effectively amount to a £2.5 billion subsidy by ordinary EU taxpayers to the transport industry, it adds; it would be more "efficient and transparent" to offer direct state subsidies to services operating in peripheral regions.

Mr Keane says the abolition of duty-free could create a dynamic effect in the economy generally which has not been explored so far. Even without duty-free, passengers would continue to buy goods at airports. And even "if there are losses in one sector, there must be gains elsewhere".

While the Government, the duty-free industry and transport unions including SIPTU have lined up against it, the Commission is not entirely alone in its view. Mr Tom Coffey, chief executive of the Dublin City Centre Business Association, believes it's not only time to get rid of duty-free, but also to abolish Aer Rianta.

He claimed that with the exception of drinks and cigarettes, prices in duty-free shops were actually higher than in downtown stores. "The simple fact is prices always rise when you have a monopoly and they fall when you have competition". Competition between airlines should be extended to all aspects of airport activity, he said.

He dismissed as "scaremongering" the claims by the duty-free lobby, such as forecasts of major profit losses for ferry companies if they have to abandon duty-free. "If they're saying they cannot sell goods to a captive market of 5,000 people which they have for three or four hours at a time, then that's an appalling admission."

However, Mr Frank O'Connell, group commercial manager of Aer Rianta and chairman of the International Duty Free Confederation, said there will undoubtedly be negative consequences from ending such a major business and "these need to be addressed".

The European Commission was intent on pushing its plan through for the sake of an economic principle, regardless of the impact. "What's required is a pragmatic approach and not a dogmatic one."

Mr O'Connell dismisses suggestions that the campaign to save intra-EU duty-free sales has come too late in the day. To launch it any earlier would have been "a waste of time" as politicians would not have been interested in something due to happen in the distant future.

His view that the timing is just right is echoed by the Minister for Public Enterprise, Ms O'Rourke, who believes the issue will be "very much on the agenda" during Britain's presidency of the EU, which begins next month.